Will a Minor Owning 5 Million in Stocks or Property Be Audited? The Key Factor the Tax Authority Checks — Failure to Provide Proof May Be Considered a Parental Gift

Many parents in Taiwan begin saving money, buying stocks, and even preparing real estate for their children from the moment they are born. However, if a minor presents hundreds of thousands of dollars to purchase stocks or real estate, will the tax authority immediately classify this as a gift from the parents? The answer does not depend solely on "how much wealth the child owns," but rather on tracing the origin of the funds used to make these purchases. According to the current Inheritance and Gift Tax Act, property acquired by a person with limited or no legal capacity is generally presumed to be a gift from their legal representative or guardian if they cannot prove that the payment came from their own funds. However, if complete proof of the source of funds is provided, even if a minor uses millions to buy a house, this purchase may not necessarily trigger another round of gift tax.

What does the tax authority investigate when a minor buys stocks or property worth 5 million?

Article 5, Paragraph 5 of the Inheritance and Gift Tax Act states that property acquired by a person with limited or no legal capacity is generally considered a gift from their legal representative or guardian. However, this does not apply if it can be proven that the payment was indeed from the purchaser’s own funds. In other words, if a minor uses assets they already owned to make the payment, the tax treatment for gift tax may differ from cases where parents directly contribute funds to purchase assets for the child.

For example, if a child owns stocks worth 5 million, and these stocks were purchased this year by the parents using their own 5 million, this is considered a direct parental investment on behalf of the child and is treated as a gift under the law. In 2026, the Kaohsiung National Tax Bureau reminded the public that transferring money from parents to children for stock purchases constitutes a cash gift. Similarly, if parents directly use their own funds to purchase stocks in the child’s name, this is also considered a deemed gift, and the gift value is generally determined based on the actual amount contributed by the parents.

However, if the child currently holds stocks valued at 5 million, and the original funds came from legally received gifts, inherited assets, or other property belonging to the child, and the value increased through the child’s own investment, it cannot be assumed that the parents gifted 5 million this year simply because the stocks are now worth 5 million. Therefore, even if a child currently holds stocks worth 5 million, this does not automatically equate to a 5 million gift from the parents this year. The original source of funds and method of acquisition must be reviewed.

Failing to Provide the 'One Proof' May Result in Being Treated as a Parental Gift

Whether a minor’s property acquisition involves a parental gift hinges on whether they can prove the payment funds belonged to the minor. In practice, the source of funds must typically be verified through bank transfers, passbook records, gift tax filings, and inheritance tax documentation. For example, if a child has received annual gifts from parents or grandparents, they should retain bank transfer records, passbooks, and relevant gift tax filings or exemption documents. If the funds originated from inheritance, inheritance tax documentation and financial records can also be submitted. When purchasing real estate, the payment must be traceable from the child’s own account to the final property payment, proving that the funds from past gifts or original holdings were preserved and not withdrawn for other uses. During audits, the tax authority compares the original source of funds, account retention status, and the final payment flow for stocks or property.

A 12-Year-Old Buys a 16 Million Property — Tax Authority Investigation Finds No Additional Gift Tax on Father

The Taipei National Tax Bureau once published a case in which a 12-year-old minor purchased real estate in Tamsui District, New Taipei City, for a total price of 16 million. The father claimed that the 16 million came from funds the son had received through gifts over the years and submitted past gift records, passbooks, and payment transfer documents for audit. After investigation, the tax authority confirmed that the 16 million in gifted funds remained fully in the child’s account, had never been withdrawn for other purposes, and that the property purchase was indeed funded from the child’s own assets. Therefore, the payment was confirmed as belonging to the child, and the purchase was not considered an additional 16 million gift from the father. Even if a minor uses millions to buy property, as long as they can prove the funds were already their own, the purchase itself does not necessarily constitute a new parental gift.

How Much Gift Tax Applies If a Father Uses 5 Million This Year to Buy Stocks for His Child?

Consider another scenario: In 2026, a father uses his own 5 million to purchase stocks for his minor child, with no other gifts or deductible items that year. The result differs. According to current Ministry of Finance regulations, the annual gift tax exemption in 2026 is 2.44 million per donor, and this exemption is calculated per donor, not per recipient child.

Assuming the full 5 million is considered the father’s contribution, the taxable amount is "5 million minus 2.44 million = 2.56 million." Under the 2026 gift tax brackets, this net taxable amount falls within the 10% tax rate range. Therefore, under this simplified assumption with no other gifts or deductions, the tax would be "2.56 million × 10% = 256,000." In other words, if a father directly uses 5 million this year to buy stocks for his child and the entire amount is classified as a gift, approximately 256,000 in gift tax may be incurred. If the asset is real estate, the valuation method for gift tax differs and cannot be directly calculated using the same 5 million cash gift example.

If Parents Buy a 5 Million Property and Give It to Their Child, Is the Gift Tax Based Directly on 5 Million?

If a father spends 5 million to buy a property and registers it directly in the child’s name, the gift tax calculation does not necessarily use the 5 million transaction price as the gift value. According to current inheritance and gift tax regulations, when parents use their own funds to purchase real estate for their children, it may involve gift tax. However, the valuation of real estate gifts is generally based on the announced land value at the time of transfer for land and the assessed standard price for buildings, rather than the market transaction price.

Therefore, even with the same 5 million amount, the valuation methods differ between a parent using 5 million in cash to buy stocks for a child versus spending 5 million to buy a property and registering it in the child’s name.

If Parents Gradually Gift Money Over the Years, and the Child Later Uses It to Buy Property, Will They Be Taxed Again?

If parents have gradually gifted funds to their child over many years, and the child later uses that money to buy property, will they be taxed a second time? The earlier case of the 12-year-old purchasing a 16 million property serves as an example. As long as it can be proven that these funds were fully gifted in the past and have remained the child’s property, and the child uses their existing assets to purchase property, this purchase will not automatically be considered a new parental gift simply due to the high amount. However, whether the original gift in previous years triggered a gift tax filing or payment obligation must still be assessed separately based on whether the annual exemption limit was exceeded at that time. For the tax authority, historical records of transfers, gifts, deposits, and investments are often key evidence in determining whether the funds truly belong to the child.

Three Ways Parents Help Children Invest in Stocks — Different Gift Valuation Methods

In June 2026, the Kaohsiung National Tax Bureau highlighted common scenarios regarding "parents helping children invest in stocks": (1) parents transferring cash to the child to buy stocks, (2) parents directly using their own funds to purchase stocks in the child’s name, and (3) parents directly gifting their own stocks to the child. The gift valuation differs across these methods. For example, if parents gift their own listed stocks to their child, the gift value is generally based on the closing price on the date of the gift. Transferring cash to the child constitutes a cash gift. If parents use their own money to buy stocks for the child, the actual amount contributed is used to determine the gift value. A minor purchasing 5 million in stocks or real estate will not automatically be taxed solely due to the high asset value. Whether it constitutes a parental gift depends on the source of the purchase funds and the ability to provide supporting documentation.